Russia unveils $25bn oil link to Pacific
Market watch top headlines
December 26 2012, 04:15AM
By Dmitry Zaks
MOSCOW, Dec 25 AFP - Russian President Vladimir Putin has unveiled the final extension of a new $US25 billion ($A24 billion) oil pipeline to the Pacific that underscores the energy power's gradual shift away from stagnant European markets.
The East Siberia-Pacific Ocean (ESPO) link is also expected to expand sales to the United States and fulfil Putin's dream of cementing Russia's place as a dominant force in international crude markets.
Moscow hopes to turn the price of oil transported through ESPO into a benchmark in the Asia-Pacific region that competes with West Texas Intermediate (WTI) - the US oil standard whose price some traders believe is too heavily based on domestic political factors.
But analysts worry that Russia may currently lack enough accessible oil in its underdeveloped East Siberia fields to keep the line fully flowing despite strong demand in China and Japan.
"There is just enough East Siberian oil for the existing pipeline," said Sberbank Asset Management energy analyst Valery Nesterov.
"But expanding this pipeline further would be impossible without West Siberian oil - and that oil is already meant to go west," Nesterov pointed out.
Putin brushed those concerns aside as he joined in the launch ceremony by video link from the Far East city of Khabarovsk.
"By completing the second leg, our potential is expanding," Putin said in televised remarks.
The second leg of the 4,200-kilometre pipe runs from fields west of Lake Baikal to the Pacific port of Kozmino near the northeastern edge of China.
The port - previously connected to East Siberian oil fields by rail - also provides Russia with quick access to Japan and South Korea.
But the head of the Transneft state oil pipeline operator said the lion's share of the crude from the final leg would in fact be destined for the United States.
"The American market will receive 35 per cent of Kozmino oil," Nikolai Tokarev said at the opening ceremony in comments reported by the company's website.
"Around 30 per cent will go to Japan and 28 per cent to China."
Tokarev appeared to be placing his bets on new markets as he dismissed the idea of offering Europe any assurances that the continent could continue to rely on Russian oil.
"We do not owe a single EU country a thing, and we are certainly not obligated to account for ourselves," RIA Novosti quoted Tokarev as saying.